Credit Risk Latin America: Four Services Providers for Small Foreign Businesses

Debt Collection Latin America & the Caribbean

Small foreign businesses run a certain credit risk when they do business in Latin America. If eventually, your counterpart does not pay, the financial impact on your company can be substantial and money and resources can be lost.

How can small foreign businesses protect themselves from such risks, when they enter the lucrative Latin American emerging markets? Here are four business partners you should consider as a small business owner.

Engage a Local Commercial Representative for Latin America

Latin america local representativeTo start with, engage a local representative for the Latin American market specialized in servicing foreign companies. The local representative can provide a local network of potential business partners and can help you enter the Latin American market. Also, it can assist with legal and administrative advice, do due diligence for you in Latin America, and connect you with reliable local lawyers, accountants and service providers. This might require a small initial…

View original post 542 more words

Settlement Negotiations In Latin America

Debt Collection Latin America & the Caribbean

You may have been in a situation that, while doing business in Latin America, your Latin American client refuses to pay because of issues.

Provided that your client is a professional party with good intentions, there may be plenty of reasons not to go for hardline collections or legal measures, but rather take on the approach of settlement negotiations.

The following are in our experience the most common categories of issues that may be the reason Latin American companies default on payments with foreign business partners.

Your Client May Have Financial Issues

Latin America financial issuesYour counter party might have stopped or slowed down with payments because it encounters financial issues. This could be because of business specific situations, including bad commercial decisions, mismanagement, start-up difficulties and therefore struggles with cashflow, or just bad luck with its products or services.

Sometimes the issues are sector related, and a whole sector may suffer because…

View original post 754 more words

If a Company in Mexico is Not Paying

Debt Collection Latin America & the Caribbean

Mexico is an emerging market and for many foreign companies it offers a wealth of opportunities to do business. But what you encounter payment issues with a Mexican client? What if a company in Mexico is not paying?

Check Your Files

Mexico company not payingFirst of all, check your files. Are you able to reach your client by phone and email? Dou you have cell phone numbers of the decision makers? Have you spoken with payment at the accounts payable, as well as people on the commercial side? Are all your internal sources exhausted and is your client in Mexico still not paying? Then make sure that you have a complete file, including paperwork, contact details and notes of actions taken, before you proceed with the next step.

Contact a Debt Collection Agency

The next step is to engage a debt collection agency who can service you in Mexico. This can be your

View original post 527 more words

Four questions before going legal in Latin American debt collection

Debt Collection Latin America & the Caribbean

Collecting a debt in Latin America may be a complicated and slow process. In the amicable phase, reaching a debtor, establishing contact, negotiating a deal and getting payments going may be generally enough. In several cases, amicably one will not be able to collect an outstanding debt.

Latin America legal debt collectionNaturally, the next step is to try to enforce payment of the debt through legal proceedings. However, and as already indicate before in our blog posts, in general one should be cautious and conservative when it comes down to starting a law suit in the attempt to collect a debt Latin America.

First, all possible amicable attempts must really be completely exhausted before even starting to consider legal proceedings. If amicable collections have not been successful, and no payment was done, or no payment plan could be agreed on, or the debt was not otherwise settled or compensated, then legal options for collections…

View original post 546 more words

GDPR and Global Debt Collection

As of May 25, 2018, the GDPR became enforceable. It affects business worldwide and has had a permanent impact on compliance and due diligence.

What does GDPR mean? And how does GDPR affect global debt collection?

What Does GDPR Mean?

GDPR Debt RecoveryGDPR is the abbreviation of “General Data Protection Regulation”. GDPR is a regulation that requires businesses to protect the personal data and privacy of citizens of the European Economic Area (EEA) for transactions that take placewithin the EEAmember states, as well as the transfer of personal data outside the EEA. The EEA includes all countries of the European Union plus Iceland, Liechtenstein and Norway.

The GDPR contains provisions and requirements related to the processing of personal data of individuals. Any company that stores or processes personal information about EEA citizens must comply with the GDPR, even if they do not have a business presence in any of the EEA member states.

The specific criteria for companies required to comply are:

  1. Companies that have apresence in an EEAcountry;
  2. Companies without apresence in the EEA, but whichprocesses personal data of residentsof EEA members;
  3. Companies with more than 250 employees;
  4. Companies with lessthan 250 employees but whosedata-processing impacts the rights and freedoms of data subjects.

In reality, this means that the GDPR covers almost all companies that process personal data of individuals being citizens or residents of any of the EEA members.

How Does GDPR Impact International Debt Collection?

Debt collection agency typically process information, in order to provide their debt collection services. This is especially the case for debt collection agencies dedicated to B2C collections, but it may also cover B2B collections, if the data that is processed contains personal information of individuals.

It impacts international debt collection, if there is a transfer of data from a creditor to a(n) (international) debt collection agency, or from one debt collection agency to another (foreign one), and if the data is related to an individual being a citizen or a resident of any of the EEA members, or if in any other way a collection agency is collecting a cross border claim with personal data of a citizen or a resident of any of the EEA members involved.

Stay Compliant: Having A GDPR Policy In Place

GDPR debt collection protocolsThe so called “data controllers”and “data processors”of personal data must put in place appropriate technical and organizational measures to implement the data protection principles. That also goes for debt collection agencies active in international debt collection, whereby the creditor or the sending debt collection agency is the “data controller” and the receiving debt collection agency the “data processor.

The GDPR basically definesseven key principles, to be taken into account by companies when putting together a protocol for processing personal data of EEA residents:lawfulness, fairness and transparency; purpose limitation; data minimization; accuracy; storage limitation; integrity and confidentiality; and accountability.

The GDPR protects the following information, and technical and organizational protocols should take them into account to build the appropriate GDPR-proof protection mechanisms:

  1. Basic identity information such as nameand last name, address and ID info;
  2. Web data such as location, IP address and cookie data;
  3. Health and genetic data;
  4. Biometric data;
  5. Racial or ethnic data;
  6. Political opinions;
  7. S$xual orientation.

The General Data Protection Regulation(GDPR) requires businesses to protect the personal data and privacy of citizens of the European Economic Area (EEA). The GDPR impact international debt collection, since there is a transfer of personal data from the creditor or a local debt collection agency, to another (foreign) debt collection agency. It is important for the international debt collection agency to be compliant and to have a GDPR policy in place.

If you want to know more about international debt collectionin general, and debt collection in Latin America and the Caribbean in particular, please reach out to Cobroamericas, on Linked-In or follow us on Twitter.

To participate in conversations about debt collection in Latin America please join the Linked-In Group Debt Collection Latin America.

David Zannoni

Latin America: how to prevent receivables from becoming uncollectible

Debt Collection Latin America & the Caribbean

Doing business in emerging markets requires a basic understanding of the countries your clients are based in.

Latin America is very diverse and offers business opportunities and challenges, which differ per country. Uruguay is different from Mexico, Chile is an open economy and Argentina and Brazil have foreign currency exchange restrictions, for example.

If you wish to avoid uncollectible receivables in Latin America, here are five topics you should focus your attention on.

Your “know your client policy” for Latin America

First of all, know the people and the companies you are doing business with. Where are your clients based? What is their business track record? Can you get referrals on them? What is their financial status and their commercial reputation, locally and internationally?

Legal context: contracts and other documents

Latin America contractsThe next step is to understand the legal context. How do contracts and other documents, like order forms, certificates and…

View original post 409 more words

Debt Collection for Commercial Transactions in Latin America

Debt Collection Latin America & the Caribbean

To collect overdue payments owed in connection with a commercial transaction in Latin America, it is important to follow a step-by-step approach. Below are the stages of debt collection the foreign creditor should take into consideration.

Amicable debt collection for commercial transactions

The first step is to attempt to collect the debt amicably, generally on a contingency basis. This means that the foreign creditor will contract a debt collection agency. The creditor does not run any financial risk, as the agency will only charge commission in case of success. For the debtor, the involvement of a debt collector may imply to push needed towards a solution, which is full payment or a payment plan. Usually, a debt collection agency takes a couple of months to attempt to obtain an amicable solution for the overdue payment on the commercial transaction.

Mediation in case of disputes

Latin America commercial mediationIf amicable collections do not achieve…

View original post 395 more words

How to be successful in international debt collection

Debt Collection Latin America & the Caribbean

140915 International Debt Collection 4International debt collection has its whole own field of expertise. Collecting from foreign debtors can be challenging.

Once a claim is border crossing the circumstances that determine your chances for success can differ substantially from country to country. Your may even have to work with one or more intermediaries to collect locally from your foreign debtor.

Collecting internationally obviously means trying to cash your or your client’s money, but it also means guiding your organization or your client through the entire process of international debt collection.

What are the characteristics of a successful international debt collector? Below are twelve characteristics of what I believe a successful international debt collector should have.

1. Patience

Be patient. Things may take more time than back home. It may be harder to get a grip on debtor’s environment and socio-economic circumstances. Procedures, institutes and bureaucracy may slow things down. Culturally, life in general may…

View original post 771 more words

Four Advantages of a Third Party International Collection Specialist

Debt Collection Latin America & the Caribbean

140823 Third Party Collector 3For many debt collection agencies, cross border collection cases cause an issue. Often agencies do not really know what to do with them, as they are outside the scope of their regular work field. Some collection agencies set up their own international divisions or hire people in house to deal with international cases. Sometimes they join an international debt collection network. Although some of these solutions may work, they may also bring up other questions like how to make an international division actually profitable, do all members of the international debt collection network have the servicing quality standards the agency requires, and is in house personnel justifiable if international is not the company’s core business?

It may be much more beneficial on the long run for debt collection agencies to engage third party international collection specialist for international cases. These specialists can be a debt collection agency whose core business…

View original post 543 more words

International B2B Debt Negotiations

There are several ways for creditors and debtors to engage in International B2B Debt Negotiations.

Which are the most efficient ways?

International B2B Debt Negotiations in Person

What can be one of the most efficient ways of International B2B Debt Negotiations, is for creditor (and / or their representatives like lawyers or a debt collection agency) and debtor to meet each other in person. Meeting each other in person means that people can look each other in the eyes, notice each other’s body language, and connect on a personal level. This can be a positive impulse to work towards a solution for existing issues (whether financial, service-related or with respect to quality of delivered goods). However, in the case of international claims, there is likely a considerable physical distance between creditor and debtor. Therefore, it may not be cost-efficient to have (many) in-person meetings.

Using the Phone to Negotiate an International Debt

Debt Negotiations by PhoneIn International B2B Debt Negotiations, likely most of the negotiations between creditor and debtor will take place by phone. Depending on the complicity of the claim and the negotiations, it may be useful to have several conversations before reaching a conclusion – an agreement, or escalation (engaging third party intermediaries, starting legal action or freeze the commercial relationship, for example). During such conversations, creditor and debtor will be able to better understand each other’s position, show and receive empathy, discuss several potential solutions without formalizing anything yet (as that will happen by email).

Negotiating International Debts via Zoom and Skype

Debt Negotiations by Skype and ZoomAn alternative to phone calls or in-person meetings about international claims, is to engage in negotiations by means of video calls, like Zoom or Skype, or similar Apps. The advantages as opposed to phone calls, is the creditor and the debtor can see each other and make visual contact. This may be perceived as more personalized than a normal phone call, and a suitable (and more efficient) alternative if in-person meetings are not possible due to distance, costs or emergency (like the COVID19 crisis).

International B2B Debt Negotiations via Email

It is nowadays customary to carry out (part of) International B2B Debt Negotiations by email. Negotiations by email are key to summarize phone discussions, send formal proposals, to confirm agreements and to follow up on promises made. However, it should be complimentary to phone calls, Zoom or Skype discussions, or in-person meetings, not replace them, due to the static nature of email negotiations.

Global Debt NegotiationsInternational B2B Debt Negotiations can be done via in-person meetings, phone calls, Zoom or Skype meetings, or email. Probably the most efficient combination is to have phone calls or Skype and Zoom meetings, whereby email is used as a complimentary tool to summarize, send formal proposals, formalize agreements and follow up on promises.

If you want to know more about international B2B debt negotiations, please reach out to Cobroamericas, on Linked-In or follow us on Twitter.

To participate in conversations about debt collection in Latin America please join the Linked-In Group Debt Collection Latin America.

David Zannoni